“The time to buy is when there is blood in the streets” – Baron Rothschild
You Are Invited…And It’s Free
I belong to several Mastermind and Mentoring Groups focused on investing and I’d like you to be my guest at an upcoming educational event.
You are invited to join Financial Strategist Russell Gray and Special Guest Ryan Gibson, Co-Founder of Spartan Investment Group!
Investor Mentoring Club
With Host Russell Gray
Featuring Special Guest Ryan Gibson
Tuesday, August 15th
5 PM PT | 8 PM ET
ONLINE – LIVE & INTERACTIVE
Ryan Gibson was working full time as an airline pilot when turbulent times in the airline industry sparked his interest in real estate investing. After running out of his own capital, he discovered syndication and began building a business in his spare time.
Today, Spartan Investment Group has been named an Inc. 5000 fastest growing company THREE years in a row … And consistently raises 10 to 12 million dollars per month.
Ryan’s company has invested more than $300 million in self storage units.
During the last decade, self storage investment returns have outpaced most other property types … But that’s just one of the many reasons self storage is Ryan’s investment of choice!
Get registered and Join Host Russell Gray, Ryan Gibson, and the IMC faculty LIVE on August 15th to learn more about self storage and building a successful real estate business …
Multifamily Demand Remains Stable As Rent Growth Slows
“While some markets are experiencing slowing growth, multifamily largely continues to perform well, with a solid 95 percent occupancy rate and moderate rent growth in most metros. However, economic uncertainty and high interest rates present ongoing challenges, and the sector is dealing with a refinancing crisis,” Yardi Matrix says in their national report for June.
Highlights of the June report
- The average U.S. asking rent rose $7 in June to $1,726, while year-over-year growth fell to 1.8 percent, down 70 basis points from May and—outside of the pandemic year—the lowest growth rate since 2011. However multifamily demand remains stable.
- Readers of the Matrix monthly report might notice that the Top 30 metros have been refreshed to provide a regionally diverse mix that reflects the highest amount of population and multifamily stock, along with the most growth.
- Single-family rental rates increased $5 in June to $2,103, while year-over-year growth fell 80 basis points to 1.3 percent. Occupancy rates are holding up, reflecting robust demand as home sales sputter.
“Worries coming into the year about a hard landing for multifamily seem to be unfounded, but the market’s ongoing growth is somewhat fragile, given the Federal Reserve’s attempt to cool the job market,” Yardi Matrix says.
“That effort does not appear to be over, as officials have signaled more rate hikes to come. Thus, the ongoing crisis for properties in need of refinancing is far from over.”
Lease renewal slowing continues
Renewal rent growth is decelerating “but very slowly, reflecting the strength of demand and the large gap between existing residents and asking rents.
Renewal rents, the change for residents that are rolling over existing leases, rose 8.5 percent year-over-year nationally in April, down from 8.6 percent in March.
National lease renewal rates were 64.4 percent in April, down from 65.9 percent in March.
Borrowers Not Interested In high-cost mortgages
Yardi Matrix says the increase in interest rates over the last 15 months “has changed the mortgage market for multifamily. Borrowers have less appetite for debt, and short-term fixed-rate loans are becoming increasingly popular.
- Lenders, including Fannie Mae and Freddie Mac, have seen mortgage volume plunge as a result of a wide market bid-ask spread.
- More borrowers prefer five-year fixed-rate loans that can be prepaid after three years to provide flexibility when rates are expected to decline.
About Yardi Matrix
Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population.
Mortgage rates won’t go back down to 3% in my lifetime, says real estate expert—here’s why
If you’re a U.S. homebuyer waiting for a return to super-low mortgage rates, don’t hold your breath.
The short-lived era of 3% interest rates for 30-year fixed mortgages is over, and unlikely to return anytime soon — perhaps for decades — says Lawrence Yun, chief economist at the National Association of Realtors.
“One can never truly predict the future, but I don’t see mortgage rates returning back to the 3% range in the remainder of my lifetime,” he says.
That’s because average 30-year fixed mortgage rates of 3% or less were an anomaly related to the pandemic, lasting from about July 2020 to Nov. 2022. Historically, the rates have been closer to an average of 7% over the past 50 years, according to Freddie Mac data.
Why super-low mortgage rates won’t return anytime soon
Historically low mortgage rates during the pandemic were “an exceptional measure, during exceptionally uncertain times,” says Yun.
With the pandemic came economic uncertainty not seen since the 2008 financial crisis. Fearing a prolonged recession, the Federal Reserve followed the same playbook it used in 2008, pumping money into the economy to stimulate growth.
As was the case in 2008, the Fed slashed interest rates to nearly 0%, created emergency lending programs and bought government bonds and mortgage-backed securities, otherwise known as quantitative easing.
Since mortgage rates are closely linked to the Fed’s benchmark interest rate and can be driven further down by quantitative easing, the interest on mortgages subsequently hit rock bottom at 2.67% in January 2021.
Congress also passed trillions of dollars in Covid-19 relief and stimulus spending, which helped increase U.S. national debt by roughly 30% between 2020 and 2022, according to Treasury Department data.
However, unlike 2008, the economy recovered quickly and rising inflation soon became a problem. By spring 2021, the year-over-year inflation rate had accelerated beyond the Fed’s benchmark of 2%, forcing the central bank to start raising interest rates again. And with that, mortgage rates rose too.
As a result of inflation and current federal spending deficits, Yun doesn’t think the Fed is likely to drop interest rates down to nearly 0% again, even in the event of another financial market panic or pandemic.
Other economists who spoke to CNBC Make It agree that homebuyers shouldn’t expect a return to record-low mortgage rates in the near term.
“It’s unlikely that the Federal Reserve will respond with the same breadth and aggressiveness like it did in 2020, as the very low mortgage rates in 2020 were caused by very unique circumstances” related to the pandemic, says Abbey Omodunbi, senior economist at PNC Financial Services.
“I haven’t seen mortgages that low in over 30 years in the business,” says Dottie Herman, vice chair at Douglas Elliman. “It’s highly unlikely we’ll see rates that low anytime soon.”
Where mortgage rates are headed
The current average mortgage rate for a 30-year fixed-rate mortgage is 6.81% as of July 6, slightly lower than its November peak of 7.08%, per Freddie Mac data. (Check out this list of the best mortgage lenders here, from CNBC Select.)
However, many projections are expecting a steady decline over the next year or so.
Oklahoma Woman’s Bag of “Junk Silver” Coins Worth More Than 17 Times Face Value
A bag of “junk silver” given to a woman by her father more than 50 years ago is now worth at least five figures.
The Oklahoma woman received a bag of 2,000 silver half-dollar coins as a gift back in 1970. While the face value of the coins is just $1,000, the silver alone is worth over $17,800.
And because the coins are still in the original mint-sealed bag, they could fetch up to over $100,000 at an auction.
Rick Tomaska, co-founder of Rare Collectibles TV, said, “This is undoubtedly one of the last if not the very last known surviving, mint-sealed bag of 1963 Denver Mint Franklin half-dollars. The woman told me she kept it all these years because she loves silver.”
This reveals the difference between real money and fiat currency issued by the US government today.
The half-dollar coins in the bag were minted in Denver in 1963 when American coins were still made primarily out of silver.
That changed when President Lyndon B. Johnson signed the Coinage Act of 1965, setting into motion five decades of currency debasement that continues today. Under the law, silver dimes and quarters, and half-dollars no longer contain silver. Instead, the Treasury mints coins made of “composites, with faces of the same alloy used in our 5-cent piece that is bonded to a core of pure copper.”
Today, we call pre-1965 dimes and quarters “junk silver,” but we really should call modern coins junk.
Johnson promised removing silver would have no impact on the value of US coinage. “[The] Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin,” he said.
The reality turned out a lot different, as Seth Lipsky explained in a Wall Street Journal column.
“When LBJ signed the 1965 act, the value of a dollar was almost exactly the same as it had been in 1792—0.77 ounces of silver. Despite some downs and ups, on average it had been remarkably steady for the long span…”
“The value of the dollar started sinking after the 1965 coinage act, and by 1980 the dollar—so long valued at 0.77 ounces of silver—plunged to 0.02 ounces of silver. Today it is valued at 0.06 ounces of silver.”
Johnson also claimed silver coins would “very definitely” not disappear or “even become rarities.”
As the value of the silver in pre-1965 quarters and dimes increased, demand for the coins skyrocketed right along with it. People began holding on to them. Today, finding an old silver dime or quarter in circulation is a rare treat. In fact, they have become so rare in the “wild,” investors now buy bags of “junk silver” as a way to preserve wealth in the face of continuing debasement.
Financial analyst Robert Prechter summed up the impact of the Coinage Act of 1965 beautifully.
“The year 1965, then, marked the official end of money usage in America. That’s when the Fed’s notes and the Treasury’s tokens became the official currency, unredeemable in anything. The dollar became merely an accounting unit. The government was now fully free to extract value from its citizens’ savings accounts through the process of issuing debt and having the Fed turn it into checking accounts.”
“The change in 1965 shifted the basis of the nation’s accounting unit from money to the policies of politicians and central bankers. It set the government and the Fed completely free to create and spend new accounting units at their pleasure.”
The government and the Fed have done just that, and that’s why a $1,000 bag of coins is now worth more than 17 times face value.
The elderly Oklahoma woman will benefit from holding on to real money. The rest of us are paying the price for failing to do so.
How To Solve The Affordable Housing Crisis
I recently received my ADU Specialist Credential and am assisting homeowners, investors and developers understand site eligibility, local regulations, development process/costs and the return on investment.
Accessory Dwelling Units (ADU) are also known as secondary units, in-law units, granny flats, backyard cottages, etc. No matter what you call them, ADUs are an innovative, affordable, effective option for adding much needed housing in California. They are self contained residential units on the same property as a single-family home or a multi-family building. ADUs must have a kitchen (or efficiency kitchen), bathroom, place to sleep and a separate entrance from the main property. You can use an ADU to house family or friends, or lease to a rent-paying tenant. New policies are making ADUs more affordable to build, in part by limiting development impact fees and relaxing zoning requirements. By design, ADUs are more affordable and can provide additional income to homeowners and often the rent generated from the ADU can pay for the entire project in a matter of years.
If you or someone you know might be interested in learning more how to help solve the current affordable housing crisis while also creating some additional and passive income, please contact me.